Despite Bad Marks, For-Profit Colleges Still Passing

It has been a rough stretch in Washington for for-profit higher education. The Obama administration has fought to tighten regulations linking student aid to graduates’ “gainful employment” prospects. Consumer advocacy groups have spotlighted the debt load that often comes unaccompanied by diplomas. Hollister Petraeus, the wife of David Patraeus, has been leading a crusade against for-profit schools that pursue veterans (and their lucrative G.I. benefits).

And recently, the Government Accountability Office detailed an undercover investigation in which fictitious students enrolled and performed poorly at for-profits, frequently without penalty. (“For example, one student submitted photos of celebrities and political figures in lieu of essay question responses but still earned a passing grade.”)

The for-profit sector counters that critics unfairly target it for problems equally prevalent at nonprofits (all of those jobless 99 percenters protesting their student loan debt did not go to the University of Phoenix). And they make one compelling argument: for-profit schools fill a need no one else will.

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This last point is supported by the long history of for-profits in the United States, which dates back a century and more before the rise of Phoenix. The history reveals an industry whose good and bad fortunes have long been tied to federal student aid, leading to the moment today when the sector relies – unlike its nonprofit counterparts — almost exclusively on government student loan money. But history also suggests that there’s nothing inherently unworkable about the for-profit model — and that, going forward, such schools will have to play some role in U.S. education.

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The earliest for-profit schools, dating to the 1820s, were mom-and-pop institutions that offered practical training for local industries as apprenticeships were fading out. More revealing, though, is what nonprofit schools were up to the time.

“They were still teaching Greek and Latin and a classical curriculum, a very standardized curriculum that wasn’t intended to have any sort of practical application whatsoever,” said Kevin Kinser, a professor at State University of New York-Albany who has extensively researched nontraditional higher education. “That was specifically rejected as a model for education in this period.”

THE IDEA LOBBYMiller-McCune's Washington correspondent Emily Badger follows the ideas informing, explaining and influencing government, from the local think tank circuit to academic research that shapes D.C. policy from afar.

At the time, federal student aid didn’t exist. It didn’t become available until the 1917 Smith-Hughes Act, which specifically provided funding for vocational training — but excluded for-profits. Throughout much of their history, such schools didn’t offer degrees, and they were viewed as something apart from higher education. They became eligible, however, for the post-World War II G.I. Bill, and that era presaged some of the problems skeptics associate with them today.

“It caused a lot of trouble,” Kinser said, “because there was really no federal way of identifying what was a legitimate institution of higher education. So you had a lot of fly-by-night institutions that were emerging to get this new money that was coming in.”

The college accreditation system launched as a result, and when the 1965 Higher Education Act was passed, creating Pell Grants, for-profit schools were once again excluded. They successfully lobbied by 1972 to expand eligibility to institutions not just granting degrees, but also preparing students for “gainful employment” — ironically, the language that now bedevils them today.

In the 1970s and ’80s, federal aid shifted largely from Pell Grants to more widely accessible student loans, transforming for-profits and nonprofit education alike. For-profit schools during this era transitioned away from local workforce training (where the local workplaces offered the promise of paid tuition) into a national model of Internet-based distance learning financed by student loans. For-profit powerhouses DeVry and the University of Phoenix went public on the stock market in the early 1990s. And as many schools began to offer degree programs — even doctorates — the distinction between for-profit trade programs and actual higher education blurred.

“It was formerly pretty easy to ignore the for-profit sector, they were small, they were practically a rounding error when you looked the size of higher education,” Kinser said. “That’s no longer the case when you’re representing something like 10 percent of enrollment, 25 percent of the Pell Grants, when you’ve got campuses in just about every state in the U.S. That makes it kind of hard to think about them as being irrelevant to higher education, and higher education planning in the country.”

Their critics, Kinser said, over-emphasize the business model of giant corporations like Phoenix. But the industry’s defenders, he adds, often over-emphasize an educational model that normalizes failure. For-profits enroll from a population that’s less likely to be successful, this logic goes, and so we should all focus on those who graduates and not the many students who don’t.

In reality, Kinser said, for-profits need reform, but they can also teach traditional schools a few things about recruiting minorities and serving adult learners. And, in at least one way, they can’t be replaced.

“For-profit schools are absolutely necessary when it comes to the non-degree function,” he said, referring to the vocational programs for those interested in gaining job skills but perhaps not training in Greek or Latin. “There’s no real way you could deal with the non-degree enrollment without a for-profit sector, it just isn’t practical.”

That is to say, in Kinser’s view, there’s nothing fundamentally flawed about an educational model that makes a profit.

“If we can conceptualize hospitals run for profit — and that’s a much more like life-and-death scenario than education,” he said, “I don’t see why we can’t do the same with for-profit education.”

Emily Badger writes about cities and urban policy for the New York Times from the San Francisco bureau. She's particularly interested in housing, transportation, and inequality — and how they're all connected. She joined the Times in 2016 from the Washington Post.